Russian lawmakers voted to end state-controlled OAO Gazprom’s monopoly on exports of liquefied natural gas as competitors plan to build plants to produce the chilled fuel.
The bill was passed in the last two of three readings by lawmakers in the lower house of parliament today. Once signed into law, it will allow OAO Novatek and OAO Rosneft to ship tankers of the fuel to foreign markets as Russia seeks to double its share of the global LNG market by 2020.
President Vladimir Putin in June called for the gas export laws to be eased to take advantage of a window in the Asia- Pacific market before supplies begin from the U.S., Australia and Africa. Since Putin granted Gazprom the exclusive legal right to ship gas abroad in 2006 to avoid undermining export prices, the monopoly hasn’t started building any LNG capacity.
“To remain competitive on global gas markets, Russia needs to add an LNG component to its export strategy,” Ildar Davletshin, an analyst at Renaissance Capital in Moscow, said today by phone. “If you look at the project pipeline in Australia and East Africa, Russia risks losing out.”
The draft law will grant access to LNG exports to those companies developing fields with licenses that stipulate the gas is intended for LNG as well as state companies producing from offshore blocks, and could take effect as soon as Dec. 1, according to a copy on the website of parliament’s lower house, the State Duma.
After the president signs the law, Novatek will have control over exports from the $20 billion Yamal LNG project that it’s developing with Total SA and China National Petroleum Corp. The gas producer, controlled by billionaires Gennady Timchenko and Leonid Mikhelson, plans to send its first commercial shipments in the first half of 2017, Yamal LNG Marketing & Shipping Director Gabriel Brecque said in Paris on Nov. 20.
State-controlled Rosneft and Exxon Mobil Corp. are planning to start an LNG plant with capacity of 5 million metric tons on Sakhalin Island in the Pacific by the end of the decade.
Russia aims to produce at least 40 million tons a year, or more than 11 percent of the world’s LNG by 2020 from about 5 percent now, Deputy Energy Minister Kirill Molodtsov said at a September conference on Sakhalin, where Gazprom bought into the country’s only plant for the fuel in 2006. The plant began output in 2009.